A Fatal Off-shoring / Outsourcing Attraction As French IT Firms Focus On India
posted in Outsourcing News and Top Outsourcing deals |Source:www.Times of India
After many years of adopting a wait-and-watch attitude driven by internal resistance and client scepticism, a large number of French IT service providers are beginning to warm to the off-shore strategy, including the creation of delivery centres overseas, mainly in India, even while the bulk of them remain cautious as ever about acquiring off-shore services firms.
A veritable slew of French firms, including Altran, Atos Origin, Bull, CapGemini, GFI Informatique, Silicomp, Sopra Group, SQLI, Unilog (Logica CMG) and Valtech have all opted to create their own offshore subsidiaries, many of which are based in India. However, just a handful of them, including Bull, CapGemini, CS Communications, Sopra Group and Valtech have made acquisitions overseas.
A Forrester Research report points out that apart from CapGemini’s deal with Kanbay, most companies chasing inorganic strategy have ended up acquiring smaller firms i.e. those with a maximum of 200-employees only. In addition, French services firms do not view long distance partnerships as a ‘viable option’, Forrester adds. Though, these IT firms are using off-shore locations for services, such as, application coding, integration, including maintenance and testing, amongst other functions.
Kiran Karnik, President of NASSCOM affirms: “As global competition in the IT services space intensifies, French vendors will feel a compelling need to set-up and scale-up operations in India, to strengthen their off-shore appeal over the next 2-3 years. We feel that many of these companies, like their global counterparts, may choose a hybrid route i.e. a captive along with third party relationships.”
While, Bull bought Polish firm AMG.net in 2006, CapGemini acquired Indigo in 2006 and Kanbay in 2007 in a $1.25-billion deal. Other takeovers include, Valtech acquiring Indian off-shore company Majoris; CS Communications acquiring Romanian and Croatian firms; and the buy out of UK’s Newell & Budge by the Sopra Group.
India’s IT industry continues to hold a fatal attraction for those wishing to streamline, expand and make a killing in the world of information technology. Even the fastidiously finicky French are beginning to believe that, perhaps, they need help from Indian techies to retain some of the ‘sheen’ and ‘gloss’ of their famous ‘edge’!
